Jun 1, 2013

"On the whole, it is patience which makes the final difference between those who succeed or fail in all things. All the greatest people have it in an infinite degree, and among the less, the patient weak ones always conquer the impatient strong." - John Ruskin

I’ve been in plenty of board rooms over the years, and have dealt with many rooms filled with executives. The one thing I’ve learned in negotiating and business is simply that patience, along with calculated actions for the long-tail, are far more successful than knee-jerk reactions and short term.

Let us say you have an idea for something, maybe a product or service. Yes, it behooves you to plan out and engage in due diligence, but when dealing with the people who can aide you in that endeavor, it often will seem like things aren’t going the way you would like. Maybe they show disinterest, or they would prefer you to position yourself more to their liking and in line with involvements that they already have under way. This is the point when you should understand that not everyone has your best interest in mind and are looking for how what you can offer will benefit them – even if it means wholesale disregard for what you bring to the table.

Whenever this happens, just remain diligent. This sort of reaction is the first sign of negotiation, and they are feeling you out to see just how passionate you are about what it is you are presenting. Can they get away with picking and choosing from what you offer in pieces “al a carte” and if so, can they convince you to do all the work while they reap the benefits? This is a competitive negotiation tactic and it is something you should not tolerate if you truly believe in what it is you are presenting.

This is simply how business works, and especially negotiations. The goal is to see how far in their own favor they can negotiate, especially when it leaves you at a severe disadvantage. To figure out if instead of a mutual partnership they can instead negotiate their way to having you work on their projects by incorporating parts of your own and foregoing the whole.

My advice to would-be entrepreneurs is simply to hold your ground.

In any endeavor, if you fully believe in what you are offering, then the prospect of tearing it up to do something else unrelated should be out of the question. One would not expect a person who is offering a fighter jet to agree instead to make the tires simply because a company needs tires but not the jet. Your willingness to act out of impatience and desperation to appease is your Achilles’ heel and they are looking specifically for that chink in your armor.

In all negotiations, you can either be competitive, collaborative or subordinate. If you are subordinate and they are competitive, then you may as well be their rag doll. You seem desperate and easy prey for them. When I say “Hold your ground” what I mean is to keep things neutral in negotiation whenever possible. Don’t concede to one extreme or the other for their sake. You are there to negotiate, not dictate your plans nor be a subordinate to their pre-existing plans. The purpose is to come out with a mutually beneficial agreement which reaches both their needs as well as your own.

In all negotiations, somebody is in control of the conversation and direction. If it isn’t you when your ideas are being presented on the whole, then you are sure to walk out of those conversations with results that wholly favor them and not yourself.

In a way, patience is your ultimate ally in proceedings. It is better to stand your ground if you truly believe in what it is you are bringing to the table than to show an eager willingness to jump through hoops in order to appease their pre-existing projects while wholesale ignoring your own.

Always ready to jettison the cargo at the drop of a hat leaves you with an empty ship any way you look at it. Instead of carrying your own ideas and projects, you will find your ship replaced with everyone else’s cargo.

That doesn’t mean you should be inflexible on the whole, it just means to have a sense of perspective when you are discussing things. If you walk into a meeting and you say “Here is the product/service I’m working toward and I believe it is mutually beneficial if we were to collaborate” and they reply with “Here is our own product/service and we’d like you to use that instead of yours.” then you can either bring the negotiation back to neutral or make it clear that you aren’t interested in foregoing your own system/product to elevate theirs.

In short, don’t appease one sided negotiations.

Plot a Course

There is (of course) some amount of work up front you should have done before getting to this point.

The first course of action is always to define your product or services. This is to mean writing out a business plan. What are you looking to provide, what do you need to accomplish this, what are your milestones, how much working capital is required to get to the first milestone, and how long until your ROI (return on investment) kicks in? Also to note, you should clearly define your markets and how you will position yourself within them to make money as soon as possible. Once you have this under control, you are now ready to seek partnerships and aide to that endeavor. Whether this be through raising capital or strategic alliance, you have your foundation already in place.

If you haven’t done this already, you are sowing the seeds of a foundation which is as solid as the shifting sands. You will find yourself willing to change your course in a moment’s notice if you think you’ll have their favor. If you have no official position to stand on, then you better believe the other party will define that position for you, and it won’t be in your favor.

Even a sand castle looks impressive until the rising tide washes it away.

The second course of action is to figure out where you will do business. If you are seeking investors or to raise capital, then there needs to be a company for them to write the check to. Barring this, you won’t find much interest going forward until you do. It doesn’t matter if you have the greatest idea since sliced bread in that business plan if you aren’t providing potential investors a means to write that check. Another consideration when you are setting up the company itself is to identify who is already on that executive roster. Are the key players in your business qualified for the environment which you have them participating?

The other question to answer is to identify what you are lacking. If you come into it thinking you can wear all of the hats, you are sadly mistaken, and setting yourself up for failure. Understand both your strengths and weaknesses, and play to your strengths while delegating your weaknesses to people in your team who have a proficiency in that area.

The third course of action is to look for ways to raise the capital or get your business underway for at least a prototype or initial phase for roll-out. This may include things like angel funding, or it may be government grants or things like SBIR (small business information requests) if you are looking to deal with the military or even National Science Foundation. Keep in mind that it is highly unlikely that anything they state they need in SBIR lists will match what it is you are looking to provide. Try to identify in this case the SBIRs that closely resemble what you want to provide as possible. If for no other reason than it will help fund the R&D of components of your product in the meantime. If you are seeking grant money (and there is often quite a lot to be had if you know where to look and apply properly), then you will more often than not find that this route is more lenient for requirements than an SBIR. In the realm of government grants, you might just find the requirement to be “Technology business run by a woman”.

If you are at a phase where all you have is a business plan, then that should be enough to work with angel investors, but this isn’t an easy route and requires the utmost diligence and patience. Keep in mind that angel investors get thousands of proposals on a regular basis and everybody acts like what they offer is the thing that will change the world – even if it’s just an Android app that farts. Be prepared to define exactly why your idea or product is better than the rest and why they should give a damn.

SBIRs or grants may provide the initial working capital to start working on a prototype or initial roll-out of your business demonstration, but these are as reliable as the angel funding route since there is a lot of work up front and you are far from guaranteed in winning those grants or SBIRs.

If you are in a position where you are working with angel investors to get things together so they can raise capital, don’t write it off and continue looking elsewhere. You’ve found your avenue for advancement, and you need to focus on it. If you’re acting with a sense of attention deficit, and are unable to focus on what you have in front of you, then you will sabotage your own efforts. If you are working to raise that capital, then everyone else becomes a customer after the fact – so don’t waste your time and efforts chasing maybes and vague notions when you are staring at a definite.

This in itself is just good business practice. Effectively making decisions and focusing on the goal at hand. Never spend twenty hours doing something for a maybe when you can choose to work 3 hours for a definite.

Negotiations

This is the point where quite a few people fail miserably. You finally get that meeting with Mr or Ms Big to discuss your business and how they can help it along, and you are met with indifference or constantly put off/rescheduled.

Yeah… we’re going to have to move that scheduled meeting to sometime on *coughs* so we can move this forward. Something came up that is of the utmost importance, but your meeting is very important to me. We’ll get back to you on *coughs* to let you know.

Don’t panic. This is a negotiation tactic in the business world, and more often than not it is done on purpose. The other alternative is that they simply don’t value your time – in which case see the prior post about the 150 hour work day to get a grip on what is and is not worth spending your time on.

The message they are trying to send is that they are more important than you, and that you are on their schedule and at their beck and call. You should be honored they found the time of day to talk with you at all because (gosh!) they’re just so darned busy! It’s a lot like the psychological tactic of having their chair behind the desk raised higher than the ones you will sit in on the other side. It’s simply a psychological power play to give them an upper hand.

By the time you actually do get into a meeting with them, they are going to act disinterested at best, but maybe polite. They’ll mention maybe that they are working on other things and ask if what you are doing can benefit those things. Maybe they’ll focus on just a sliver of what you are offering and try to approach you with an al a carte method. Are you willing to wholesale ignore your offering to appease their pre-existing projects?

I’ve been in meetings where they’ve shown such disinterest that they arbitrarily miss the meeting, or have to be rounded up down the halls and dragged into the conversation kicking and screaming. Even then, they are just killing time and being polite at best, offering nothing of interest to the conversation at hand and simply running out the clock.

My response to those types is simply writing them off.

Sometimes, they really are busy – so a little bit of leeway is in order here. But if you find yourself in a position where you are constantly being put off, having to pull teeth to get anything meaningful, or just constantly chasing them down, then it’s time to let them stew on it and walk away. If they are interested, then they can come to you. In the meantime, you shouldn’t be wasting your time begging for the time of day out of them and instead should be dealing with the people who actually are interested without the bullshit games.

It’s wonderful that you have a new service and product that could revolutionize the industry. Tell us how what you’re offering will help us finish our pre-existing projects, for instance – this one part of what you are talking about would be useful to an existing project we have ongoing, even if it is completely irrelevant to the conversation at hand.

Are you willing to forego what you are trying to achieve in order to make us look good?

If you really do believe in what you are bringing to the table, the answer should be a flat “No”. This will likely surprise the ever living hell out of them, that you are so confident in what you have to offer that you know it will work with or without their involvement, and that you will be available if they change their mind. You are giving them the opportunity to be involved early on because you believe it will benefit them, and you are doing them the favor. It is a mutually beneficial situation if they are willing to honor that, but if they wish to make it a one sided endeavor in their favor, then you simply state it like it is and wish them a great day.

Make it a point to outline that you are working with others to bring this about, and leave the option on the table if they want to be involved. Under no circumstances should you allow others to waste your time.

In one fell swoop, you’ve turned the table.

After all, do you really want to work with people who are so self-interested that they would tear your hard work apart just to benefit themselves and throw you the scraps in the end? If you answered yes to this hypothetical question, you don’t deserve to be in business.

Protection

If you have a novel service or product, it is in your best interest to apply for patents to cover it or to draft a NDA (Non-disclosure Agreement) to be signed by parties who will be privy to the details of what it is your are doing or looking to do. In most cases, investors don’t care about NDAs and won’t sign them (Guy Kawasaki is an excellent example of predatory investing) and those are the people you should walk away from. Any investor who is truly on the up and up and not just looking for predatory investments (ie: investments where they drop money in, even when you don’t need it, only to put their name on the company and own it so they can sell it off), will instead understand and want you to protect the whole since they will possibly be a part of it.

As Guy Kawasaki once said – “Investors want to see a business where there is already people at the trough.” They want to see you making money already and they are more than happy then to give you money and have you sign away your rights to it all because they bought you a server.

The question he never answers is from a purely logistical standpoint; who in their right mind would sign it all away if they are making money and stable? This is a case where the investors are there when you don’t need them and are happy to take the lion-share and credit of your efforts thus far, but they’re never around when you actually need them in the beginning… when you don’t have the money but actually need it.

You want people involved who actually give a damn and are proactive. The sort of people that are there in the beginning when you are starving, because they see the potential in it all and want to feed it so it can be strong and highly successful. Not the sort of people that act like vultures looking to swoop down after all is said and done and take credit for doing jack-all nothing.

It’s easy to spot those people in the beginning. They are the ones asking to see the demo and showing no interest in helping it get to that point. They want a finished product and expect you to make it for them on the vague notion of “maybe they’ll take a look when you do all the work first and finish it.”

Little Red Hen

In the tale, The Little Red Hen finds a grain of wheat, and asks for help from the other farmyard animals to plant it. But no animal will volunteer to help her.

At each further stage (harvest, threshing, milling the wheat into flour, and baking the flour into bread), the hen again asks for help from the other animals, but again she gets no assistance.

Finally, the hen has completed her task, and asks who will help her eat the bread. This time, all the previous non-participants eagerly volunteer. However, she declines their help, stating that no one aided her in the preparation work, and eats it with her chicks, leaving none for anyone else.

The moral of this story is that those who show no willingness to contribute to an end product do not deserve to enjoy the end product: "if any man will not work, never let him eat."

In the process of finding partnerships and willing parties to help produce the end-product, you are invariably going to find people unwilling to be involved unless you’re already finished with it and they can enjoy the end-product alone. Those are the same types of people who are predatory investors. Whether this be about time and sweat equity or just outright monetary investment. They want to do as little as humanly possible and take as much credit and reward as they can stamp their names on.

This will manifest in companies or entities that will simply refrain from involvement until you are finished (We’d love to see a demo), to people who are quick to supplant what you are doing with their own endeavors (That’s really amazing. I’d like to offer something completely different for you to use). Others will feign interest at best but will drag their feet in non-committal manners, indefinitely hemming and hawing in fake repertoire with no real intention to follow through. In a lot of cases, they’ll just be quick to appease their own needs without any consideration for yours – for instance, them having existing projects that can benefit from a portion of what you are trying to do but utilized out of context.

The best analogy to that last portion is if you invented Meeroos in Second Life, and while you are trying to raise capital to make it into a viable product, somebody comes to you and says: That’s a really good idea. I’m working on selling cars but that script you wrote would be great for what I’m doing! Are you willing to work on my project instead?

Now you understand the al a carte methodology, which for all intents and purposes is a lateral negotiation at best and changes the focus to their own needs entirely.

As for patents, you can file for a provisional patent for a few hundred dollars and that gives you about 1 year from filing to actually file a full patent. This would usually be enough to entice first round investors later on, so the $20,000 or more to file the patents later on shouldn’t be a problem if you’ve negotiated investment to cover it.

Otherwise, if you find yourself in a position where filing a provisional patent is out of the question (maybe too expensive or you don’t understand how), then being incorporated with an NDA is your best option from there.

Zen and the Art of Business

“Yeah… I’m going to need you to show up to this meeting I’ve scheduled arbitrari-“

“Not now. I’m just about to beat my high-score in Tetris. I might be available later on, but there’s no guarantee. I’ll let you know.”

“When will you let me know?”

“Later. Now, if you don’t mind – you’re killing my concentration here. I’m going to need you to move along. I’ve got a meeting with the Bobs in a bit.”

There’s a reason I’ve been using references from Office Space in this blog post, and it’s generally because (in a manner of speaking) it shows the right approach to dealing with passive aggressive and non-committal executives.

Two can play this game, and when you stop buying into their manipulative bullshit, they either walk away or they find a reason not to waste your time anymore. Eventually they’ll get the point, and if they don’t, then it’s not your problem.

You have a goal, and it is simply to facilitate your product or service into fruition. They are either going to help you achieve that through proactive means, or they can stop wasting your time with the Little Red Hen situation. If you can negotiate a mutually beneficial situation with them – maybe they want access to just a portion of what you have for their benefit – then you tell them if they help you build what you need then you will gladly work with them to give them what they need from that product or service. If it’s not a mutual benefit, then there’s no reason for you to appease them.

That is how they can get what they want without throwing you and your product or service under the bus to get it. You’re better than that, and now is the time to start acting like it.

Doing Nothing

Sometimes, the best response is no response at all. Talk less and listen more. Be willing to assess the situation and give it the time it needs to sort out. When you provide information to people, don’t expect them to jump immediately to your whim. It might take a few days or a week for them to mull it over and formulate a response or plan of action to make their next encounter with you fruitful.

Being busy and keeping busy are two different things. The difference is whether or not you are effectively using your time or if you’re just filling the hours of the day to seem like you’re accomplishing something when in reality you’re just spinning your tires.